'Avoid expensive mistakes' by checking remortgaging cost

Date:Wednesday 13th January 2010
Author: Susanna Kavka

Mortgage holders should carefully check the cost of remortgaging before they decide to settle for a fixed-rate option, it has been suggested.

According to the mortgage specialists at Yahoo Finance, fixed-rate products are currently offering very low rates for short-term deals.

But while they can look far cheaper when compared to a five year deal, when the cost of remortgaging is taken into account, they can work out to be more expensive.

Over a five-year period, a consumer who uses a two-year product will have to remortgage twice and pay out fees at the beginning of their loan, after two years and again four years into their mortgage.

However, if they decide to opt for a five year deal they will only have to pay out once at the beginning of their term, avoiding this extra hidden cost.

Fixed-rate loans have decreased in popularity dramatically recently, mortgage specialist John Carcol has reported, as just 21 per cent of its clients opted for this form of loan in November 2009.